Behind every successful enterprise is data-driven finance

HFS, in partnership with EXL, reached out to 207 F&A leaders worldwide and across industries to understand how the finance landscape is changing and embracing the journey to becoming data-driven. This report highlights these enterprises’ responses to this journey, where they see themselves in it, and what role they see “finance” as a means to achieving this end.

In today’s volatile business environment, enterprises must balance growth and profitability. With US inflation touching the 9% mark as of June 2022, the markets are ever-changing. Enterprises reeling from the impact of the pandemic are now caught in the storm of recession and other market forces like the Ukraine war. The aim is to achieve quick growth, but going forward, enterprises must focus more on sustainable long-term growth; it might not be as quick as expected, but it will be more beneficial in the long run.

Finance is finished being only a cost center. Growth and profitability will remain paramount (37% of finance leaders mention it as a top priority) across functions, and finance is no exception. However, the evolving landscape of finance now requires it to fulfill the role of a strategic partner more than it did before. Around 25% of finance leaders rank being a strategic advisor as the top-most objective.

The journey to being a strategic advisor entails first becoming data-driven, which is not as easy a goal as it may seem. Enterprises must be clear about what being data-driven means. It’s not just a definition; it is a step-by-step journey.

Only 25% of organizations have a mature, data-driven finance function. Most enterprises can quickly move from Stage 1 to Stage 2 of being data-driven by building the necessary centers of excellence (CoEs) and implementing the correct internal data analysis tools. Roughly 51% of firms in our research claim to already be at Stage 2. However, utilizing these data analysis tools to derive real-time insights for strategic decision-making is the real challenge organizations currently face. Our report discusses suggestions for overcoming this challenge.

Acknowledging the challenges: the lack of analytical talent, access to data, and organizational clarity and accountability for automation. Also, a culture gap is slowing the process to becoming data-driven. Our research shows the absence of the right mix of talent, culture, and data is stopping firms from reaching their goals. However, the journey to achieving data-driven finance is expected to be smoother once these challenges are dealt with objectively.

Fast-growing firms show the way. They prioritize finance business partnering and investments in emerging tech. Our research has also shown how fast-moving firms become data-driven and achieve their goals. We have outlined a couple of differences between data ready, data proficient and data driven enterprises. Slow-moving firms can use these differences to identify where they are on the data-driven journey and what are the changes they will need to make to achieve this goal.

The Bottom Line: Progressing to data-driven finance will be necessary, and it is easier said than done. While most organizations see this as a one-to-two-year journey, we need to wait and see if that happens, given the various internal changes required from enterprises to achieve this goal.